Thursday, August 4, 2011

Rhode Island Law Cuts Retirees' Pensions To Pay Bondholders

Thanks to a new [Rhode Island] state law that places bondholders ahead of other creditors, Central Falls plans to pay investors the entire $635,000 it owes them in October.

Retired city workers might not be so lucky. Instead of $296,000 in pension checks promised before Central Falls became the second U.S. municipality to seek Chapter 9 protection this year, the retirees could get only $196,000 in payments next month—a 34% cut.